PS3 Manufacturing Cost Reduced By 70%, What Does This Mean?

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For starters, it now costs Sony roughly $240 per PS3 manufactured as opposed to the launch cost of approximately $800 in 2006, a huge reduction indeed. With such a reduction in PS3 manufacturing cost, does this mean Sony should immediately begin slashing console prices, maybe, maybe not.

Sony recently reported a 2009 Q1 loss of 39.7 billion yen. Same time last year Sony saw a 35 billion yen profit. Sony reportedly sold 1.1 million PlayStation 3 consoles during the first quarter which reflects a 31 percent decline from a year earlier. Yet, looking at the playing field, Sony’s closest competitor, Microsoft’s Xbox 360 moved approximately 1.2 million consoles during the same period. Priced $200 less than the PS3, the Xbox 360 managed to only push 100,000 more consoles and of course this holds well for Sony, as it reflects Sony’s branding power. Even though there has been an outcry for a PS3 price drop, in just two and half years it appears Sony’s PS3 has managed to make it’s presence felt in this generation of consoles while maintaining a significantly higher price point.

Regardless of selling close to as many consoles as the competition, a 31 percent decline from a year earlier is a loss Sony can’t continue to experience. An inevitable price drop could come in the form of the rumored PS3 slim but Sony has been extremely closed lip about the truth of this rumor. With manufacturing costs reduced by 70%, Sony could potentially reduce the PS3 price point however, the question still remains, can Sony afford to introduce a price drop in 2009?

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